BBL BHP Group Plc

By Katherine Dunn and Sara Schonhardt 

LONDON--Copper prices inched to a 20-month high for the second day in a row on Tuesday, as cuts to production at an Indonesia mine added to supply headaches amid a strike at the Escondida mine in northern Chile.

The three-month London Metal Exchange copper price rose by 0.42% to $6,153 per metric ton in midmorning European trading, the highest price since late May 2015.

On Tuesday, a spokesman for mining giant Freeport-McMoRan Inc. in Indonesia said its Grasberg mine stopped production of copper concentrate last Friday because the company had yet to receive an export license for the mine.

The company would resume production in early March, but at a slower pace, if it has still not received the license, said Freeport Indonesia spokesman Riza Pratama.

"If this prolongs...we will cut operations to just 40% to accommodate smelting [capacity]," Mr. Pratama said.

Freeport has said it would cut output from the mine by mid-February if it didn't receive the license from the government, following new mining regulations introduced in January. On Monday, the Indonesian government clarified those regulations, including announcing the new tax rate, as part of a policy to keep more processing inside the country.

The supply pinch in Indonesia comes amid a strike at the Escondida mine in the Atacama Desert in northern Chile, the world's largest copper mine, which began last Thursday. The mine is majority-owned by BHP Billiton Ltd.

While it is rare for two large mines to have supply problems simultaneously, the Escondida dispute is less likely to be resolved quickly than the question of Grasberg's license, said Warren Patterson, a commodities strategist at ING in Amsterdam.

"That situation could be resolved in the next few days, whereas the Escondida situation could be a drawn-out process," he said.

The chances that there will be a resolution to the strike in the next few days are "pretty slim" Mr. Patterson said, and could spur further labor disputes in Chile as the year goes on.

Nickel was also rallying on Tuesday to a seven-week high, after the Philippines' department of environment and natural resources reaffirmed plans to close and suspend a large number of nickel mines for allegedly violating environmental regulations. On Tuesday, the Chamber of Mines of the Philippines condemned the move.

Nickel was up 1.22% at $10,815 a metric ton on Tuesday.

The other base metals were also higher. Aluminum was up 1.66% at $1,902 per ton, lead was up 0.41% at $2,431 per ton, zinc was up 1.13% at $2,947 per ton, and tin was up 0.53% at $19,875 per ton.

Write to Katherine Dunn at katherine.dunn@wsj.com and Sara Schonhardt at sara.schonhardt@wsj.com.

(END) Dow Jones Newswires

February 14, 2017 06:57 ET (11:57 GMT)

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